Scale AI relies on an army of workers classified as contractors to perform critical AI tasks such as labeling images and evaluating LLM responses for Big Tech and others. But the AI startup, recently valued at $13.8 billion, faces growing legal challenges over its labor practices.
On January 3, 2025, former Scale AI employee Amber Rogowitz filed a lawsuit alleging that Scale misclassified her and other employees as contractors rather than employees. The lawsuit alleges that the company's pay effectively equates to $15 an hour, which violates California's minimum wage of $16.00 at the time of her employment (currently $16.50).
According to the complaint, Rogowitz worked for Outlier, a subsidiary of Scale, from March to June 2024. She typically worked about 10 hours a day, but was only paid five hours, the lawsuit alleges, in part because she wasn't paid for the time she spent reviewing instructions and training. Because the lawsuit challenges the contractor classification, it also alleges widespread violations of state laws covering employee overtime pay, business expenses, meal time leave, and sick leave.
This is the second time in less than a month that Scale has been sued over these types of concerns. On December 10, 2024, SFGate reported that a lawsuit was filed against Scale, alleging widespread wage theft and worker misclassification. In this case, the plaintiffs sought to become a class action leader.
Rogowich's lawsuit is not a class action lawsuit, but it was filed under the California Private Attorneys Act (PAGA), which gives workers the power to enforce labor laws on behalf of the state. PAGA lawsuits are often faster and easier to file than class actions, but 75% of the fine must go to the state. Rogovich's lawsuit does not name any other plaintiffs, but he is seeking penalties on behalf of similarly situated workers who worked on AI at Scale.
Rogovich's lawsuit does not seek a specific dollar amount, but it does seek statutory penalties that could total thousands of dollars per worker plus attorney fees.
Scale spokesperson Tom Channick told TechCrunch that Scale paid Rogowicz fairly and removed her from Outlier for violating unspecified community guidelines. Scale says it fully complies with the law and strives to ensure that wages always meet or exceed local living wage standards. Scales added that this case is not surprising because plaintiffs' lawyers often try to emulate previous cases.
Brian Schwartz, a Bay Area employment rights attorney who represents Rogowich, told TechCrunch that he does not know the details of Scale's claims against Rogowich. But Schwartz said it's “very common in these cases for companies facing charges that may involve large groups of workers to attack Messenger.”
“We hope that our lawsuit will help companies take responsibility for and correct the misclassification of workers and provide relief to wronged workers like our customers who have suffered wage violations in the past. ,” Schwartz said.